Hog prices are nearing the highest level for the year, trading over 68 cents per pound on Friday.
The market has been rising as U.S. and Chinese demand for pork has been increasing over the last month, but prices skyrocketed this week on news that African swine fever was discovered in Germany.
The disease, which does not affect humans but is highly lethal to hogs, ravaged China last year. A wild boar infected with the disease was found in Germany, leading to concerns that its domesticated hogs could be threatened as well. Germany is the largest pork exporter in Europe.
In a rapid response, South Korea, Germany’s second-largest buyer, placed a ban on German pork, and markets fear that China could do the same. As a result, German hog prices collapsed by over 10% overnight.
Meanwhile, U.S. prices exploded as traders assumed that foreign buyers will be increasingly looking to American pork, perceived as safer and virus-free.
Saudis slash oil prices
Oil fell to a three-month low last week, dropping near $36 per barrel. Tuesday’s decline was the largest single-day slide since June.
Prices are weakening as concerns about the global economy and COVID-related travel restrictions continue to nag markets.
To offset weak demand, Saudi Arabia announced that it was dropping prices. Saudi Arabia is one of the world’s largest oil seller, so its moves reverberate through the industry.
After the announcement, investors fled the market dragging prices to the multi-month low.
Soybean shortfall looms
The U.S. Department of Agriculture released its monthly report on U.S. crop production, showing a drop in soybean yields for this fall’s crop. Yields have been falling after a rough month of lackluster weather and an intense windstorm across much of the Midwest.
Alongside increased demand, this resulted in a steep drop in projected soybean stockpiles.
This looming supply crunch shot prices to a two-year high, carrying prices over $10 per bushel.
Opinions are solely the writers’. Walt and Alex Breitinger are with Breitinger & Sons LLC, a commodity futures brokerage firm in Valparaiso. They can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.
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September 13, 2020 at 06:30PM
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Futures File: Pork market sizzling | Futures File with Walt Breitinger - nwitimes.com
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